March 03, 2010

Most Americans, after buying a product from a store, expect that they will be able to return it -- at least within a reasonable amount of time and assuming the item is undamaged. This instinct is borne out by the policies of most retailers, who generally allow returns of most items within a set time period, for a refund, exchange, or store credit. In Europe, this is a right explicitly protected by contract law. In the US, by contrast, the rules vary from state to state, but in general there is no legally protected right to return an item. In his latest WIP talk, Professor Eric Posner presented a paper he and Professor Omri Ben-Shahar are working on regarding what they call the "right to withdraw" from these contracts (alas, there are sound prudential reasons for not titling the proposal the "right of return").

The core insight Posner and Ben-Shahar develop is the function allowing the return of an item serves in terms of letting consumers assess an item's value. For some purchases, such as home or office furniture, it is very difficult to determine whether the purchase is worth the money without some time experiencing it in your home. You need to know if the chair is comfortable, or if the futon matches your living room color scheme. Allowing consumers to return a product makes them more willing to buy, because they know they'll have the opportunity to determine with greater certainty the actual value the product holds to them.

There is, of course, a story from the seller's side as well. Sellers want buyers to feel comfortable purchasing their products, but they also have to worry about depreciation if the goods are returning after weeks of use. The speed at which depreciation occurs varies from product to product -- perishable items depreciate quickly, permanent furnishings more slowly. Some goods, due to cultural taboos, lose essentially their entire resale value upon being used once, which is why even stores which have generally lenient return policies won't let you return a casket. Other goods, such as music or electronic media, are vulnerable to copying, and thus returns are usually prohibited after the consumer opens the box.

The fact that most stores allow returns, and most consumers expect some reasonable ability to return products they buy, counsels turning some right of withdrawal into at least a default rule, to insure that outlier stores don't exploit consumer expectations. But the content of such a rule is more complicated. Ideally, it should maximize the ability of the consumer to gain information about the value of the product, while minimizing the risk posed to sellers via depreciation. In theory, consumers could just have an unlimited right of return subject to paying the value of any depreciation. But depreciation is extremely difficult to measure objectively. So, as an alternative, Posner and Ben-Shahar propose using time as a proxy -- as more time passes (with a rate that varies depending on the type of good), the item will be presumed to have depreciated in value more. This prevents consumers from externalizing the costs of excessive inspection and deliberation, while still allowing them some ability to back out of the contract if the goods don't turn out to be as valuable to them as they initially estimated.

The second part of the paper looks for traces of this sort of doctrine in American law. And they find one potential source in the famous ProCD v. Zeidenberg case, reviled by the bulk Contracts professors and students alike (albeit for different reasons). ProCD held enforceable additional contract terms contained "inside the box" of a computer that was purchased remotely (and were a black box to the buyer at the time he purchased the good). The 7th Circuit concluded that giving all the terms over the phone would have been impracticable, hence, the "acceptance" of the contract only came after the consumer opened the box and read and assented to the terms. This, Posner and Ben-Shahar argue, is essentially a form of the right to withdraw -- once the consumer receives the goods and finds out more information about them (here, certain contractual terms he may find overly onerous), he has, according to the court, the legal right to return the item as a matter of contract law.

Another parallel comes from the right to reject non-conforming goods, codified in the UCC. Though there are differences, two key assumptions overlap with the idea behind a right to withdraw. The first is the assumption that the buyer might not have important information regarding the quality or kind of the goods until they actually arrive at her doorstep. The notion that there is some information about the product that the buyer is unlikely to be able to obtain until after they are in her presence is similar to a right of withdrawal. Second, the UCC conditions rejection on it occurring within a reasonable amount of time after the buyer discovers (or should have discovered) the defect, and before the goods have had a change in condition (that isn't caused by the defect). This rule is designed to protect the rejection rule from being used to exploit sellers and put them at too much of a disadvantage vis-a-vis their customers. The rule effectively creates a trade-off similar to the one Posner and Ben-Shahar recommend for returns: the longer the good is in the possession of the buyer, the greater the defect necessary to justify returning it.

December 03, 2009

The modern international human rights regime needs an ideological transplant. Such is the diagnosis of Professor Eric Posner in his recent essay, Human Welfare, Not Human Rights. Posner considers several striking symptoms that characterize a moribund system of international cooperation. He discussed the paper and the symptoms with the Law and Philosophy Workshop.

Though the paper details several important points, two lines of argument were of particular interest to Workshop participants. First, Posner reports that there is no consensus among scholars as to the philosophical justification for protecting human rights, much less for any enumerated list thereof. Worse, those scholars that do engage in debate on this front largely ignore the structure of the existing international human rights regime. Second, in many cases the international regime mandates expenditure of resources to secure the protection of a particular right irrespective of competing demands for those scarce resources. At the same time, where such tradeoffs are permitted, the regime fails to indicate how to evaluate the merits of competing legitimate demands.

The prescription? Posner suggests that where there is only largely superficial agreement about human rights, nobody denies that states have a responsibility to increase the welfare of their populations. An international treaty regime that focused on requiring states to maximize the welfare of their populations would achieve a broad philosophical and international consensus, where human rights cannot. Furthermore, a regime focused on welfare would provide better guidance for pursuing and evaluating compliance by providing a single metric for maximization.

July 23, 2009

Cost-Benefit Analysis (CBA) is the dominant mechanism for weighing the utility of proposed regulation, but it is not without its critics. One major alternative is so-called "feasibility analysis". Eric Posner presented today his current paper (co-authored with fellow Chicago professor Jonathan Masur) which provides the first sustained, comprehensive attack on feasibility analysis. They conclude that feasibility analysis is unacceptably vague and has no substantial normative foundation justifying its use as an alternative to CBA.

Feasibility analysis proceeds in three steps. First, the regulatory agency identifies a risk. Second, it identifies the relevant industry that it will seek to reduce the risk in. And third, it tries to reduce the risk to the greatest degree possible, consistent with two restraints: technological, and economic. Because one of the main justifications for using feasibility analysis is that it can better account for concentrated harms, the sort of economic result that would render a proposed regulation "unfeasible" is often one that causes entire plants to close (as opposed to industry-wide layoffs scattered across every factor). Alternatively, OSHA has adopted a standard which says a regulation cannot cause more than either a 1% drop in revenue or 10% drop in profits.

April 24, 2009

Harcourt makes four distinctions: (1) outlaw-and-forgive; (2) outlaw-and-excuse; (3) legalize and regulate; and (4) outlaw. We made two distinctions: (1) outlaw-and-forgive; (2) legalize; and (3) outlaw. The confusion that has hampered this exchange arises because Harcourt’s distinctions do not track the ones that we used. We argued that outlaw-and-forgive proponents classified the necessity defense as outlaw-and-forgive whereas in fact it falls under legalize. Harcourt agrees that the necessity defense does not fall under outlaw-and-forgive but argues that it does not legalize but outlaws-and-excuses. The “outlaw-and-excuse” term is a misnomer: the necessity defense justifies, it does not excuse in the legal sense. But it is evident that the real distinction Harcourt is making is between laws that create criminal liability and laws that create affirmative defenses. This distinction splits our category, “legalize,” into two—legalize through the liability rule and legalize through the defense. Harcourt thinks that the purpose of our paper is to redefine various crimes (say, battery) so as to contain exceptions for coercive interrogation, while he appears to believe that the necessity defense remains adequate for addressing the ticking-time bomb scenario.

In fact, our paper does not come down on one side or the other of the question whether coercive interrogation in the ticking time bomb scenario (the paper did not address the Bush administration’s practices) should be authorized through a defense or in some other way. Indeed, we say that perhaps it is appropriate just to treat coercive interrogation as the model penal code treats any use of deadly force (“It seems sensible to limit coercive interrogation in the same way deadly force is limited,” p. 701 & n. 81), albeit with whatever adjustments that are needed to address the differences in setting. We go through a number of considerations touching on how the legal regime might be structured but do not come to a conclusion because our argument was limited to the claim that regulating coercive interrogation through “forgiveness,” properly understood to mean immunity created ex post by popular or political pressure, is unwise.

April 23, 2009

If I understand Bernard Harcourt’s post correctly, he believes that torture should be legal when it is “necessary” (that is, when the necessity defense is satisfied), whereas he attributes to me and a coauthor the view that if torture is to be legal, the legal regime should consist of ex ante rules (for example, authorizing certain practices and banning others) rather than an ex post standard like the necessity defense. He then criticizes us for advocating the “legalize and regulate” approach. However, Harcourt himself advocates the “legalize and regulate” approach since the necessity defense is just a way to “legalize and regulate,” as we pointed out in the article, repeating a point made by Sandy Levinson several years ago. Harcourt is seriously confused; he also misses the point of the article.

The purpose of the article was not to make this argument, but to criticize what we called the “outlaw-and-forgive” approach to torture. Our survey of the law and philosophy literatures revealed that many, perhaps most, scholars, while condemning torture very strongly, argue that it is morally justified in extreme circumstances. These writers try to reconcile their opposition to torture and their belief that it may sometimes be justified, by advocating a legal ban accompanied by political or legal forgiveness when justified—in the form of exercises of prosecutorial discretion, pardons, suspensions of sentences, and the like. (A more common example is euthanasia, which appears not to be prosecuted in many places where it is illegal.) We argued that there is little sense in this proposal: torture should either be legally banned or regulated. For the argument, see here.

The source of Harcourt’s confusion is, I believe, our statement that the necessity defense is a form of outlaw-and-forgive. That made it sound as though we disapproved of the necessity defense. However, we described the necessity defense as “outlaw-and-forgive” because the scholars we criticized did, but our main argument in this setting was that the necessity defense is in fact not an example of outlaw-and-forgive, since it simply legalizes torture when it is necessary, as I noted above. The contrary view rested on a confusion between a legal defense and extra-legal forgiveness (like a pardon). We later turned to the question whether, if torture is to be legal, the necessity defense or a system of rules would be superior. In that discussion, we did not take a strong position, instead pointing out that the answer to this question depends on various empirical factors of which we were ignorant.

The release of the torture memos has no bearing on our critique of outlaw-and-forgive. It could have a bearing on the subsidiary rules-versus-standards question that interests Harcourt. But I believe that his conclusion is premature. If the Obama administration chose to prosecute CIA agents, for example, it could turn out to be easier to convict people who violated the clear, rule-like guidelines, than people who had received a vague order to torture “if necessary.” Alternatively, it could be the case that agents given the standard would be more likely to act appropriately. It is impossible to know on the basis of the memos alone; we first need more information as to what happened.

April 22, 2009

On Monday, BloggingHeads posted a discussion between Kirkland and Ellis Professor of Law Eric Posner and The University of Connecticut's Steven Davidoff about "Economic Ants and Grasshoppers," in which they discuss where blame for the current economic crisis lies, and what could and should be done about it. A portion of the discussion is embedded below, or you can watch the whole discussion here.